I mentioned that "An attacker who manages to crack or bypass the file protections will be able to obtain the cleartext password, which is a problem". True enough, as far as the statement goes.

Imagine for a moment that this attacker has indeed managed to bypass the operating system's file system permissions, so he can read the supposedly protected file and extract the password. The requested solution is to avoid storing the password (or, somewhow, store it encrypted) so that when the attacker breaks the file permissions he will not get the [cleartext] password. Attack foiled!

Or was it?

If faced with this situation, what would the attacker do next?

We know the web server still ultimately needs the passwords, so we know the data will exist within the process at some point even if it is not on disk (or only on disk encrypted). Since the attacker bypassed the file system protections, how about modifying libns-httpd40.so (the core implementation of the server) to insert malicious code which emails him the password once the server process obtains it? That's just one example, there would be nearly endless injection points where the attacker could insert similar trickery if we assert that the file system permissions have been bypassed.

Fortunately the file system permissions aren't quite so weak. While it is true that an attacker who breaks them could indeed then read passwords out of a file, it is also true that if the attacker has this power then the entire system is compromised beyond help.